Korea, which for many years had balance-of-payment (BOP) deficits and sought to minimize imports to save foreign exchanges, relied on the GATT’s Article 18 that allowed countries to impose quantitative import restrictions if they had BOP deficits. As a result, the Korean government used a system of import licensing for many agricultural commodities and almost never issued import licenses, effectively banning imports.
Under the GATT, countries using Article 18 to justify trade barriers were subject to periodic reviews of their BOP situation. In 1987, a GATT committee reviewed Korea and urged that Korea relinquish its restrictions because Korea was running BOP surpluses by then. Based on this finding, the U.S. successfully challenged Korea’s quantitative import restrictions on beef in a GATT dispute in 1989.
A subsequent review of Korea’s BOP status in 1989 also confirmed that Korea didn’t need the quantitative restrictions to conserve foreign currency, having recorded current account surpluses. In the face of these findings, Korea agreed in 1989 to eliminate its quantitative restrictions by 1997 and announced a series of measures to liberalize many tariff items.1)
The UR coincided with the phasing out of the BOP trade barriers. In 1995, Korea’s commitment to the UR agreement subsumed the BOP concessions and, in some cases, amended them.
Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.
1) Korea drew up a three-year market liberalization program of 137 products.